Microsoft 2008 Annual Report Download - page 29

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
We have no material long-term debt. Stockholders’ equity at June 30, 2008, was $36.3 billion. We will continue
to invest in sales, marketing, product support infrastructure, and existing and advanced areas of technology.
Additions to property and equipment will continue, including new facilities, data centers, and computer systems for
research and development, sales and marketing, support, and administrative staff. Commitments for constructing
new buildings were $1.2 billion on June 30, 2008. We have operating leases for most U.S. and international sales
and support offices and certain equipment under which we incurred rental expense totaling $398 million, $325
million, and $271 million in fiscal years 2008, 2007, and 2006, respectively. We have not engaged in any related
party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to
materially affect liquidity or the availability of capital resources.
During fiscal years 2008 and 2007, our Board of Directors declared the following dividends:
Declaration Date Dividend Per Share Record Date Total Amount
Payment Date
(in millions)
(Fiscal year 2008)
September 12, 2007 $0.11 November 15, 2007 $1,034 December 13, 2007
December 19, 2007 $0.11 February 21, 2008 $1,023 March 13, 2008
March 17, 2008 $0.11 May 15, 2008 $1,020 June 12, 2008
June 11, 2008 $0.11 August 21, 2008 $1,007 September 11, 2008
(Fiscal year 2007)
September 13, 2006 $0.10 November 16, 2006 $ 980 December 14, 2006
December 20, 2006 $0.10 February 15, 2007 $ 978 March 8, 2007
March 26, 2007 $0.10 May 17, 2007 $ 952 June 14, 2007
June 27, 2007 $0.10 August 16, 2007 $938 September 13, 2007
On July 20, 2006, we announced the completion of the repurchase program initially approved by our Board of
Directors on July 20, 2004 to buy back up to $30.0 billion in Microsoft common stock. During fiscal year 2006, we
repurchased 754 million shares, or $19.8 billion, of our common stock under this plan. On July 20, 2006, we
announced that our Board of Directors authorized two new share repurchase programs: a $20.0 billion tender
offer, which was completed on August 17, 2006; and authorization for up to an additional $20.0 billion ongoing
share repurchase program with an expiration of June 30, 2011. Under the tender offer, we repurchased
approximately 155 million shares of common stock, or 1.5% of our common shares outstanding, for approximately
$3.8 billion at a price per share of $24.75. On August 18, 2006, we announced that the authorization for the $20.0
billion ongoing share repurchase program had been increased by approximately $16.2 billion. As a result, we
were authorized to repurchase additional shares in an amount up to $36.2 billion through June 30, 2011. As of
June 30, 2008, approximately $2.7 billion remained of the $36.2 billion approved repurchase amount.
We believe existing cash, cash equivalents, and short-term investments, together with funds generated from
operations, should be sufficient to meet operating requirements, regular quarterly dividends, and planned share
repurchases. Our philosophy regarding the maintenance of a balance sheet with a large component of cash and
short-term investments, as well as equity and other investments, reflects our views on potential future capital
requirements related to research and development, creation and expansion of sales distribution channels,
investments and acquisitions, share dilution management, legal risks, and challenges to our business model. We
regularly assess our investment management approach in view of our current and potential future needs.
Off-Balance Sheet Arrangements and Contractual Obligations
We provide indemnifications of varying scope and amount to certain customers against claims of intellectual
property infringement made by third parties arising from the use of our products. We evaluate estimated losses for
these indemnifications under SFAS No. 5, Accounting for Contingencies, as interpreted by FASB Interpretation
No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. We consider factors such as the degree of probability of an unfavorable outcome and the
ability to make a reasonable estimate of the amount of loss. To date, we have not encountered material costs as
a result of these obligations and have not accrued any material liabilities related to these indemnifications in our
financial statements.